A Letter to the Reader xxvii About the Authors xxix Preface xxxi About the Online Resources xxxiii Book Citations xxxv 1 Definition of and Rationales for Tax- Exempt Organizations 1 § 1.1 Definition of Nonprofit Organization 1 § 1.2 Definition of Tax- Exempt Organization 4 § 1.3 Tax- Exempt Organizations Law Philosophy 6 § 1.4 Political Philosophy Rationale 8 § 1.5 Inherent Tax Rationale 15 § 1.6 Other Rationales and Reasons for Exempt Organizations 16 § 1.7 Freedom of Association Doctrine 18 2 Overview of Nonprofit Sector and Tax- Exempt Organizations 21 § 2.

1 Profile of Nonprofit Sector 22 § 2.2 Organization of IRS 25 3 Tax Exemption: Source and Recognition 31 § 3.1 Source of Tax Exemption 31 § 3.2 Recognition of Tax Exemption 33 § 3.3 Recognition of Public Charity, Private Foundation Status 36 § 3.4 Alternatives to Tax- Exempt Status 37 4 Organizational, Operational, and Related Tests and Doctrines 39 § 4.1 Forms of Tax- Exempt Organizations 40 § 4.2 Governing Instruments 44 § 4.

3 Organizational Test 45 § 4.4 Primary Purpose Test 52 § 4.5 Operational Test 57 § 4.6 Exclusively Standard 64 § 4.7 Commensurate Test 67 § 4.8 State Action Doctrine 68 § 4.9 Commerciality Doctrine 73 § 4.10 Social Enterprise Developments 83 5 Nonprofit Governance 87 § 5.

1 Boards of Directors Basics 87 § 5.2 Board Composition and Tax Law 88 § 5.3 Board Duties and Responsibilities 89 § 5.4 Board Member Liability 91 § 5.5 Sarbanes- Oxley Act 91 § 5.6 Nonprofit Governance Principles 92 § 5.7 IRS and Governance 97 6 Concept of Charitable 107 § 6.1 Federal Tax Law Definition of Charitable 108 § 6.

2 Public Policy Doctrine 114 § 6.3 Collateral Concepts 124 § 6.4 What Tax Exemption Does Not Create 136 7 Charitable Organizations 139 § 7.1 Relief of Poor 140 § 7.2 Relief of Distressed 142 § 7.3 Credit Counseling 148 § 7.4 Provision of Housing 151 § 7.5 Down Payment Assistance 153 § 7.

6 Promotion of Health 154 7.7 Lessening Burdens of Government 176 § 7.8 Advancement of Education 180 § 7.9 Advancement of Science 185 § 7.10 Advancement of Religion 185 § 7.11 Promotion of Social Welfare 187 § 7.12 Promotion of Arts 190 § 7.13 Consortia 192 § 7.

14 Fundraising Organizations 197 § 7.15 Government Entities as Charitable Counterparts 202 § 7.16 Other Categories of Charity 206 § 7.17 Qualified Opportunity Zones 213 § 7.18 Charitable Grants to Individuals 214 8 Educational Organizations 215 § 8.1 Federal Tax Law Definition of Educational 215 § 8.2 Education Contrasted with Propaganda 216 § 8.3 Educational Institutions 219 § 8.

4 Instruction of Individuals 225 § 8.5 Instruction of Public 229 § 8.6 Educational Activity as Commercial Business 233 § 8.7 Educational Activity as Private Benefit Function 237 § 8.8 Child Care Organizations 237 9 Scientific Organizations 239 § 9.1 Federal Tax Law Definition of Science 239 § 9.2 Concept of Research 240 § 9.3 Requirement of Public Interest 243 § 9.

4 Scientific as Charitable or Educational 244 § 9.5 Technology Transfer 244 10 Religious Organizations 247 § 10.1 Constitutional Law Framework 248 § 10.2 Federal Tax Law Definition of Religion 258 § 10.3 Churches and Similar Institutions 265 § 10.4 Conventions or Associations of Churches 273 § 10.5 Integrated Auxiliaries of Churches 273 § 10.6 Mission Societies 275 § 10.

7 Religious Orders 276 § 10.8 Apostolic Organizations 277 § 10.9 Communal Groups 279 § 10.10 Retreat Facilities 280 11 Other Types of Charitable Organizations 281 § 11.1 Cruelty Prevention Organizations 281 § 11.2 Amateur Sports Organizations 281 § 11.3 Public Safety Testing Organizations 283 § 11.4 Cooperative Hospital Service Organizations 284 § 11.

5 Cooperative Educational Service Organizations 286 § 11.6 Charitable Risk Pools 287 § 11.7 Literary Organizations 288 12 Public Charities and Private Foundations 289 § 12.1 Federal Tax Law Definition of Private Foundation 290 § 12.2 Disqualified Persons 296 § 12.3 Categories of Public Charities 301 § 12.4 Private Foundation Rules 316 § 12.5 Donor- Advised Funds 328 § 12.

6 Endowment Funds 331 13 Social Welfare Organizations 335 § 13.1 Concept of Social Welfare 335 § 13.2 Requirement of Community 342 § 13.3 Conduct of Business 347 § 13.4 Advocacy Organizations 347 14 Business Leagues and Similar Organizations 349 § 14.1 Concept of Business League 349 § 14.2 Disqualifying Activities 362 § 14.3 Chambers of Commerce 373 § 14.

4 Boards of Trade 374 § 14.5 Real Estate Boards 375 15 Social Clubs 377 § 15.1 Social Clubs in General 377 § 15.2 Public Use and Investment Income Limitations 381 § 15.3 Exceptions to Limitations 385 § 15.4 Taxation of Social Clubs 387 § 15.5 Sale of Club Assets 392 16 Labor, Agricultural, and Horticultural Organizations 395 § 16.1 Labor Organizations 395 § 16.

2 Agricultural Organizations 400 § 16.3 Horticultural Organizations 405 17 Political Organizations 407 § 17.1 Political Organizations in General 408 § 17.2 Organizational Test 411 § 17.3 Operational Test 412 § 17.4 Public Policy Advocacy Activities 412 § 17.5 Taxation of Political Organizations 413 § 17.6 Taxation of Other Exempt Organizations 416 § 17.

7 Avoiding Political Organizations Tax 417 § 17.8 Independent Political Action Committees 419 18 Employee Benefit Funds 421 § 18.1 Overview 421 § 18.2 Special Rules for Welfare Benefit Funds 422 § 18.3 Voluntary Employees'' Beneficiary Associations 423 § 18.4 Supplemental Unemployment Benefit Trusts 428 § 18.5 Black Lung Benefits Trusts 429 § 18.6 Retirement Plan Trust Funds 431 § 18.

7 Other Benefit Funds 432 19 Other Categories of Tax- Exempt Organizations 433 § 19.1 Instrumentalities of the United States 434 § 19.2 Title- Holding Corporations 435 § 19.3 Local Associations of Employees 440 § 19.4 Fraternal Organizations 442 § 19.5 Benevolent or Mutual Organizations 446 § 19.6 Cemetery Companies 451 § 19.7 Credit Unions 454 § 19.

8 Mutual Reserve Funds 455 § 19.9 Insurance Companies and Associations 456 § 19.10 Crop Operations Finance Corporations 457 § 19.11 Veterans'' Organizations 458 § 19.12 Farmers'' Cooperatives 460 § 19.13 Shipowners'' Protection and Indemnity Associations 466 § 19.14 Homeowners'' Associations 467 § 19.15 High-Risk Individuals'' Health Care Coverage Organizations 469 § 19.

16 Workers'' Compensation Reinsurance Organizations 469 § 19.17 National Railroad Retirement Investment Trust 470 § 19.18 Qualified Health Insurance Issuers 470 § 19.19 Qualified Tuition Programs 472 § 19.20 ABLE Programs 475 § 19.21 Professional Sports Leagues 476 § 19.22 Governmental and Quasi- Governmental Entities 476 § 19.23 Native American Tribes 483 § 19.

24 Other Categories of Tax- Exempt Organizations 484 § 19.25 Nonexempt Membership Organizations 485 20 Private Inurement and Private Benefit Doctrines 489 § 20.1 Concept of Private Inurement 491 § 20.2 Definition of Net Earnings 493 § 20.3 Definition of Insider 494 § 20.4 Compensation Issues 497 § 20.5 Excess Executive Compensation Tax 505 § 20.6 Other Forms of Private Inurement 510 § 20.

7 Per Se Private Inurement 523 § 20.8 Incidental Private Inurement 524 § 20.9 Private Inurement and Social Welfare Organizations 526 § 20.10 Private Inurement and Business Leagues 527 § 20.11 Private Inurement and Social Clubs 529 § 20.12 Private Inurement and Other Categories of Exempt Organizations 531 § 20.13 Private Benefit Doctrine 532 21 Intermediate Sanctions 547 § 21.1 Concept of Intermediate Sanctions 548 § 21.

2 Tax- Exempt Organizations Involved 548 § 21.3 Disqualified Persons 549 § 21.4 Excess Benefit Transactions 552 § 21.5 Controlled Entities 556 § 21.6 Intermediaries 557 § 21.7 For the Use of Transactions 557 § 21.8 Initial Contract Exception 560 § 21.9 Rebuttable Presumption of Reasonableness 561 § 21.

10 Excise Tax Regime 563 § 21.11 Correction Requirement 564 § 21.12 Definitions 567 § 21.13 Indemnification and Insurance 569 § 21.14 Return for Payment of Excise Taxes 569 § 21.15 Statute of Limitations 570 § 21.16 Interrelationship with Private Inurement Doctrine 571 22 Legislative Activities by Tax- Exempt Organizations 575 § 22.1 Legislative Activities Law for Exempt Organizations-- Introduction 576 § 22.

2 Meaning of Legislation 576 § 22.3 Lobbying by Charitable Organizations 577 § 22.4 Lobbying Expenditures and Tax Sanctions 591 § 22.5 Legislative Activities of Social Welfare Organizations 591 § 22.6 Legislative Activities of Business Leagues 592 § 22.7 Legislative Activities of Other Tax- Exempt Organizations 598 § 22.8 Internet Communications 598 § 22.9 Constitutional Law Framework 599 23 Political Campaign Activities by Tax- Exempt Organizations 603 § 23.

1 Political Campaign Act.